The complexities and risks of Oregon’s marijuana legalization

Oregon legalized medical marijuana in 1998 with Ballot Measure 67, and last year Oregon legalized the recreational use of marijuana with Measure 91 – which will take effect July 1, 2015.

Even though marijuana use will be legal at the state level, it remains illegal at the federal level per the 1970 Controlled Substances Act. At the federal level, marijuana is still a Schedule I drug along with drugs like heroin and LSD. Anyone growing, selling or possessing marijuana is still committing a federal crime punishable by at least up to five years in prison and a fine up to $250,000.

According to the Thomson Reuters’ legal website FindLaw “State legislatures must create drug laws that are in compliance with the Controlled Substances Act. This means that the state drug laws may be more narrow than federal drug laws, but may not override them or be in conflict with them.” The Huffington Post reported in 2013 “states’ regulation of marijuana is illegal under the Controlled Substances Act.”

Regardless, Oregon, along with a number of other states, has created drug laws that do override and are in conflict with the federal law with regards to marijuana. That has created a great deal of legal complexity and risk as Oregon works to expand the state legalization of marijuana.

The current administration in Washington D.C. has determined that they will not make enforcing existing federal drug laws a priority in the case of marijuana. In August 2013 the U.S. Department of Justice sent out the “Cole memo” as guidance on how it would prioritize enforcement of federal marijuana drug laws. States not in compliance with the “Cole memo” are more likely to be subject to federal enforcement. The eight priorities outlined in the memo related to preventing: the use of marijuana by minors, profits from going to criminals, marijuana going to other states, trafficking of other illegal drugs, marijuana-related firearms violence, drugged driving or marijuana on federal property.

Oregon is already not in compliance with the “Cole memo.” For example, the chairman of the Oregon Liquor Control Commission estimates “that as much as 75 percent of the medical marijuana in the state winds up going to the black market.” The Oregonian quoted Sen. Ginny Burdick, D-Portland “It’s no secret that medical marijuana [from Oregon] is appearing all over the U.S. in the illegal market.” Another example of non-compliance is marijuana-related firearms violence. In 2012 a Cottage Grove man was murdered during a robbery where he was targeted because he was a medical marijuana grower, and just last month in Portland there was a double homicide where the victims ran a large medical marijuana grow operation and the killer had been trying to buy marijuana from them.

On top of concerns related to the “Cole memo”, there are bigger problems and greater risks for Oregon when the administration changes in Washington D.C. When a new president takes office in January 2017, what if they and their attorney general decide to start enforcing existing federal marijuana drug laws again?

Bankers understand the risks and are avoiding legal entanglements with marijuana. Willamette Week reported last month “the only bank in Oregon offering checking accounts to marijuana businesses is closing all its weed accounts in the next two months.” But what about other businesses and even government agencies putting themselves crosswise with federal drug laws? What if the OLCC stores marijuana in their liquor warehouses? Could they be prosecuted for trafficking? What about marijuana store owners and employees? What about a trucking company that takes baked marijuana cookies from a processing site to a retail outlet? How will businesses navigate declaring and paying taxes on marijuana sales revenues? Some Colorado marijuana sellers unsuccessfully fought the Colorado marijuana tax because they said it amounted to self-incrimination – that it was implicating themselves in federal crimes.

By moving to legalize marijuana at the state level while it remains illegal federally, Oregon has stepped way out onto legal thin ice.